Apple: Is This a Valid Warning?

Apple (NASDAQ:AAPL) was up almost 6 percent at $559.10 by midday on Monday to track back some of its losses from last week, but the stock received a negative vote. Merrill Lynch analyst Scott Craig cut his price target on Apple shares to $780 from $840, though he maintained a Buy rating. Craig was fairly ambiguous in his assessment as he insisted that he remained “positive despite recent volatility.”

Apple’s stock has experienced a troublesome last two months, with the share price shedding more than 21 percent since its September 19 closing high of $702.10. Craig attributed the stock’s recent sell-off to four factors. The first was investors’ fear of the oncoming fiscal cliff and their intention to lock in “profits heading into the year-end and a potential capital gain tax increase” in 2013. The other factors were a “perceived less than stellar” iPhone 5 launch, near-term margin pressure, and growing competition.

“Although we do not expect these uncertainties to alleviate near term, we remain positive on current product cycles and believe the stock offers a very attractive balance of growth and value,” Craig wrote in his note to investors.